Investment Myths

What the retirement industry wants you to believe.

The investment industry can be confusing at the best of times, and misleading at the worst. There’s
a
lot of complexity out there that has made people believe that investing is hard, and that paying
high
fees for advice is the only way to make good investment decisions. We disagree. We want to help
you make the best investment decisions by busting the following common investment myths.

Myth: Costs don’t matter.

10X Fact: Costs matter the most!

Costs have a dramatic impact on your long-term savings outcome. But this only becomes obvious once
fees are seen
in their proper context.

The proper context is the long term investment return above inflation, called the real return. A
realistic
real return expectation for a High Equity Portfolio is 6.5% above inflation. Every 1% in fees thus
reduces your real return by almost 15%. More importantly, this compounds over a 40-year savings
period so every 1% in fees you save increases your real return by 30%! Most individual investors pay
total fees of around 3%, which is 2% too high. Saving 2% in fees will increase your final investment
by 60%.

* National Treasury, Charges in South African retirement funds, July 2013.

We found that the cheapest funds were at least two to three times more likely to succeed than
the
priciest funds. Strikingly, our finding held across virtually every asset class and time period
we
examined, which clearly indicates that investors should keep cost in mind no matter what type of
fund
they are considering.

– Morningstar® FundInvestor SM Study 2016.
Morningstar is a leading investment research company.

Myth #2

Myth: Top fund managers can reliably beat the market.

10X Fact: Index funds outperform managed funds.

Investing is a zero-sum game, before fees: all investors together can only earn the average or
market return.
For one investor to do better, another must do worse. After fees, it becomes a losing game as all
investors
together earn the market return less total fees paid.

The odds of beating the market return consistently are low: less than 1 in 5 fund managers do so
after fees
over 20 years. The odds of picking the winning fund manager are also low: studies show that
irrespective of
past performance, future performance is virtually random.

Investors who rely on active fund managers are speculating. It is like playing Russian roulette –
but with only
one chamber empty!

Most individual investors will find the best way to own common stock is through an index fund
that
charges minimal fees. Those following this path are sure to beat the net results [after fees and
expenses] delivered by the great majority of investment professionals.

– Warren Buffett

Myth #3

Myth: The more choice the better.

10X Fact: Choice is confusing and expensive.

Investment choice — the ability to pick from a selection of funds and fund managers – penalises
investors in two ways.

Firstly, choice adds to costs, but not to the return. Few investors exercise choice as over 80% of
investors with choice
end up in the default portfolio. Secondly, those few investors exercising choice tend to make poor
choices. They focus
on recent performance; they buy what has done well, and sell what has done poorly. This often
amounts to a ‘buy-high
sell-low’ strategy.

You pay for investment choice, whether you exercise it or not. The added cost lowers your return and
your final pension.
You would be better off with just one optimal solution.

Buying funds based purely on their past performance is one of the stupidest things an investor
can do.

– Jason Zweig, Wall Street Journal

Myth #4

Myth: Stock market volatility creates investment risk.

10X Fact: Your investment risk is not meeting your
investment goal.

The investment industry and the media fixates on short term stock market returns with daily “expert”
market commentators and forecasts. The industry equates stock market fluctuations with risk.

However, no-one can predict where the stock market is going in the shorter term (anything less than
3 years) and stock market returns are always unpredictable and volatile over shorter time periods.
However, longer term returns are far more predictable and less volatile.

Your investment risk is not having enough money when you need it, in other words failing to meet you
investment goal. You can fail to achieve your investment goal because you saved too little, your
return was too low or your fees were too high. It’s really no more complex than that and stock
market
volatility has nothing to do with your investment risk.

You must manage your investment risk by having a defined goal and a sound financial plan to meet
your
goal. A financial plan comprises of a savings plan (how much to save and for how long) and an
investment plan (where to invest your savings).

No one knows where the market is going – experts or novices, soothsayers or astrologers. That’s
the simple truth.

– Fortune Magazine

Myth #5

Myth: My money is safe with a big institution.

The retirement fund industry is not transparent. Investment managers do not report total fees, and
only disclose the net
investment return. Investors accept this in blind faith and disengage from the savings process.

But to make informed decisions, you require full disclosure. In particular, you need to know all
fees, as total cost is
the single most reliable predictor of your fund’s future performance. Your annual statement should
therefore disclose the
rand amount of all fees paid and quantify the impact of total fees on your projected investment
balance at retirement. This
information will engage you and allow you to make informed decisions.

The retirement fund industry is characterised by poor disclosure, which can contribute to high
charges and harmful inertia, as consumers are not able to compare products.

10X calculator assumptions & disclaimers

Fees are the only difference between the “Industry” and 10X projections.

The fees used in the projections are inclusive of VAT. The investment referred to as “Industry” is assumed to charge total fees of 3% including VAT per annum. Morningstar’s Global Fund Investor Experience 2015 study shows that the average total expense ratio is 1.63% pa (which includes investment and performance fees), with the cost of advice and an administration platform adding an additional 1% to 1.5% pa. The investment with 10X assumes a total fee of 1% including VAT per annum and that the client comes directly to 10X (i.e. no advisor fee). This is the maximum investment fee charged by 10X.

The calculator assumes the you save 10% of the salary you input and that this grows annually in line with inflation.

The investment term and savings period is assumed to be from your current age to age 65, unless you are over 55. If you are over 55 the investment term is assumed to be 20 years.

Your projected investment value is shown in real terms (today's money). This means we have shown what future values would be worth today, once we have stripped out inflation.

The projected average and poor investment returns are based on historic market returns after inflation from 1900 to 2017. Historically over your savings period, one in four outcomes have been worse than the outcome shown under poor returns and three in four have been better. The projections therefore account for historical market fluctuations.

The projections are based on the 10X High Equity portfolio, which is designed for investors with an investment term of 5 years and longer. The portfolio may be highly volatile over shorter periods.

The projections do not account for tax in any way.

The projections shown are based on information provided by you regarding your financial situation. 10X Investments does not in any way guarantee the projected benefits shown; we offer these projections merely to assist you in your financial planning. Although our projections take account of the historical returns earned in the South African and International markets, future market returns are uncertain. Past performance does not guarantee nor indicate future results.

The calculations provided should not be construed as financial, legal or tax advice. In addition, such information should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy.

10X Investments is a licensed Financial Services Provider #28250 and S13B Funds Administrator #24/444. The information on our website does not constitute advice as defined by the FAIS Act.

10X calculator assumptions & disclaimers

Fees are the only difference between the “Industry” and 10X projections.

The fees used in the projections are inclusive of VAT. The investment referred to as “Industry” is assumed to charge total fees of 3% including VAT per annum. Morningstar’s Global Fund Investor Experience 2015 study shows that the average total expense ratio is 1.63% pa (which includes investment and performance fees), with the cost of advice and an administration platform adding an additional 1% to 1.5% pa. The investment with 10X is assumed to charge a fee according to the 10X Living Annuity scale. The maximum fee in this scale is 0.86% including VAT per annum.

Your projected income and investment value are shown in real terms (today's money). This means we have shown what future values would be worth today, once we have stripped out inflation.

The projected income in the first year will be equal to your desired income provided your annual income is between the regulatory limits of 2.5% and 17.5% of your investment value. Each year your projected income will keep pace with inflation, provided that it falls within these regulatory limits. The number of years that your projected income is able to keep pace with inflation without exceeding the regulatory cap of 17.5% is displayed on the outputs.

The projected average and poor investment returns are based on historic market returns after inflation from 1900 to 2017. These returns are based on the portfolio you selected (defaulted to 10X High Equity if your term exceeds 5 year). Historically over your savings period, one in four outcomes have been worse than the outcome shown under poor returns and three in four have been better. The projections therefore account for historical market fluctuations.

The projections shown are based on information provided by you regarding your financial situation. 10X Investments does not in any way guarantee the projected benefits shown; we offer these projections merely to assist you in your financial planning. Although our projections take account of the historical returns earned in the South African and International markets, future market returns are uncertain. Past performance does not guarantee nor indicate future results.

The calculations provided should not be construed as financial, legal or tax advice. In addition, such information should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy.

Note that the 10X Living Annuity is underwritten by Guardrisk Life Limited (FSP No. 76).

10X Investments is a licensed Financial Services Provider #28250 and S13B Funds Administrator #24/444. The information on our website does not constitute advice as defined by the FAIS Act. The 10X Living Annuity is underwritten by Guardrisk Life Limited (FSP No.76).

10X calculator assumptions & disclaimers

Fees are the only difference between the “Industry” and 10X projections.

The fees used in the projections are inclusive of VAT. The investment referred to as “Industry” is assumed to charge total fees of 3% including VAT per annum. Morningstar’s Global Fund Investor Experience 2015 study shows that the average total expense ratio is 1.63% pa (which includes investment and performance fees), with the cost of advice and an administration platform adding an additional 1% to 1.5% pa. The investment with 10X is assumed to charge a fee according to the 10X Investment fee scale and that the client comes directly to 10X (i.e. no advisor fee). The maximum fee charged by 10X in these scales is 1.04% including VAT per annum.

Your projected benefits are shown in real terms (today's money). This means we have shown what future values would be worth today, once we have stripped out inflation.

The projected benefits are shown at age 65, unless you have changed the retirement age on the output page.

Where applicable, the projected monthly income assumes that you purchase an inflation-linked guaranteed annuity at retirement with your projected investment value. This estimate assumes that you use your entire projected investment value to purchase an annuity at retirement. Our estimate is based on the recent price of an inflation-linked guaranteed annuity without a spouse. An inflation-linked guaranteed annuity will provide you with an income that grows annually with inflation and pays you an income for the remainder of your life.

The projected average and poor investment returns are based on historic market returns after inflation from 1900 to 2017. Historically over your savings period, one in four outcomes have been worse than the outcome shown under poor returns and three in four have been better. The projections therefore account for historical market fluctuations.

The projections above are based on the default investment strategy called the 10X default glide path, unless you changed the investment portfolio on the output page . The 10X default glide path automatically matches the investment portfolio’s asset allocation to your assumed retirement age. This ensures that when you are more than five years from retirement that you mainly own assets that are expected to deliver high returns - with expected higher volatility of returns - and that the portfolio will gradually be switched into less volatile assets - with expected lower returns - in the last five years before you retire, with the aim of preserving capital.

The projections shown are based on information provided by you regarding your financial situation. 10X Investments does not in any way guarantee the projected benefits shown; we offer these projections merely to assist you in your financial planning. Although our projections take account of the historical returns earned in the South African and International markets, future market returns are uncertain. Past performance does not guarantee nor indicate future results.

The calculations provided should not be construed as financial, legal or tax advice. In addition, such information should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy.

10X Investments is a licensed Financial Services Provider #28250 and S13B Funds Administrator #24/444. The information on our website does not constitute advice as defined by the FAIS Act.

10X calculator assumptions & disclaimers

Fees are the only difference between the “Industry” and 10X projections.

The fees used in the projections are inclusive of VAT. The investment referred to as “Industry” is assumed to charge total fees of 3% including VAT per annum. Morningstar’s Global Fund Investor Experience 2015 study shows that the average total expense ratio is 1.63% pa (which includes investment and performance fees), with the cost of advice and an administration platform adding an additional 1% to 1.5% pa. The investment with 10X assumes a total fee of 0.57% including VAT per annum and that the client comes directly to 10X (i.e. no advisor fee).

Your projected benefits are shown in real terms (today's money). This means we have shown what future values would be worth today, once we have stripped out inflation.

The projected average and poor investment returns are based on historic market returns after inflation from 1900 to 2017. Historically over your savings period, one in four outcomes have been worse than the outcome shown under poor returns and three in four have been better. The projections therefore account for historical market fluctuations.

Your projected monthly income (if applicable), grows in line with inflation until your money is depleted.

The projections are based on the 10X High Equity portfolio, which is designed for investors with an investment term of 5 years and longer. The portfolio may be highly volatile over shorter periods.

The projections do not account for tax in any way.

The projections shown are based on information provided by you regarding your financial situation. 10X Investments does not in any way guarantee the projected benefits shown; we offer these projections merely to assist you in your financial planning. Although our projections take account of the historical returns earned in the South African and International markets, future market returns are uncertain. Past performance does not guarantee nor indicate future results.

The calculations provided should not be construed as financial, legal or tax advice. In addition, such information should not be relied upon as the only source of information. This information is supplied from sources we believe to be reliable but we cannot guarantee its accuracy.

10X Investments is a licensed Financial Services Provider #28250 and S13B Funds Administrator #24/444. The information on our website does not constitute advice as defined by the FAIS Act.